Bayh Presses For Resolution of Chrysler Property Tax Matter
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Bayh Presses For Resolution of Chrysler Property Tax Matter

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Howard County schools, public services could be shortchanged if Chrysler fails to pay full property tax bill

Washington, DC – July 15, 2009 – (RealEstateRama) — Senator Evan Bayh, together with Senator Richard Lugar and Congressmen Joe Donnelly and Dan Burton, sent a letter today to President Obama’s auto recovery chief Dr. Edward Montgomery requesting a meeting to discuss solutions to the ongoing property tax dispute between Howard County and Chrysler.

Chrysler’s failure to pay its full property tax obligation could cause significant fiscal difficulties for the school system and public services in Howard County and the City of Kokomo. For 2009, Chrysler’s total property tax obligation to Howard County and the City of Kokomo is $16.7 million.

“Chrysler plays a key role in the economic vitality of Howard County,” said Senator Bayh.  “The failure of Chrysler to pay its full property tax obligation to Howard County and Kokomo could harm the school system and curtail public services. I recently traveled to Kokomo with Ed Montgomery, who is the president’s point person on auto community recovery.  He saw firsthand the important role Chrysler facilities play in the livelihood of Hoosiers in Howard County. We need to work together to find a solution to this issue so families living in Howard County and the City of Kokomo are not left holding the property tax bill following Chrysler’s bankruptcy.”

Below is a copy of the letter.
July 15, 2009
Dr. Edward Montgomery, Director of Recovery for Auto Workers and Communities
U.S. Department of Labor, Frances Perkins Building
200 Constitution Avenue, NW
Washington, DC 20210
Dear Dr. Montgomery:

We write to you today to make you aware of a developing matter relating to Chrysler Group, LLC (“Chrysler”) and its property tax obligations to Howard County and the City of Kokomo.

As you know, the City of Kokomo is home to four Chrysler facilities that employ more than 6,000 Hoosiers.  Chrysler is a valued part of the community and the backbone of the local economy.  Not surprisingly, it also accounts for a significant portion of the real and personal property tax levies of both the city and the county.

For 2009, Chrysler’s total property tax obligation to Howard County and the City of Kokomo is $16.7 million, or 15% of the area’s total levy.  Almost half (45%) of Northwestern Schools’ transportation and debt service budget for 2009 would come from property taxes paid by Chrysler.  We have enclosed for your reference a more detailed breakdown of the extent to which the city, county and its school corporations rely on Chrysler’s property tax payments.

Property taxes in the State of Indiana are billed bi-annually.  This year, spring payments were due June 19 and fall payments will be due November 10.  Chrysler paid the spring installment of its real property tax debt ($2.2 million) on June 26, leaving an outstanding property tax debt of approximately $6.1 million.  According to city and county officials, Chrysler’s attorneys have confirmed that the entirety of the company’s personal property tax debt payable in both 2009 and 2010 ($24.6 million) is the responsibility of “Old Chrysler,” which remains in bankruptcy.  Given the complexity of any bankruptcy proceeding and uncertainty as to the value of Old Chrysler’s assets, we believe city and county officials are rightfully concerned about whether and when full payment might be forthcoming.

For all of the foregoing reasons, we ask that you meet with us to discuss possible solutions to the fiscal problems that would be brought on by Chrysler’s failure to pay timely its full personal property tax obligation to Howard County and the City of Kokomo.

Thank you for your prompt personal attention and consideration in this matter.
Sincerely,
Senator Richard Lugar
Senator Evan Bayh
Congressman Dan Burton
Congressman Joe Donnelly

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